Will RFID Grow Up in 2004?

Many process issues still to be resolved, vendor landscape nascent, technology research firm reports

Many process issues still to be resolved, vendor landscape nascent, technology research firm reports

Oyster Bay, NY  January 16, 2004  If 2003 was the year the market awakened to supply chain-based radio frequency identification (RFID), 2004 will surely be the year it readies for school, even though many process issues remain to be resolved and the vendor landscape is still nascent, according to a new report from New York technology research firm ABI.

The two mandates for 2005, set by Wal-Mart and the U.S. Department of Defense (DoD), pushed RFID into the public eye last year, and moved it from company science experiment to boardroom priority, with a focus on improving enterprise-wide operations.

Now manufacturers that supply Wal-Mart and the DoD are diving into an increasingly busy RFID market already brimming with developing standards, large company entrants, start-up software developers and numerous systems integrators. Despite some recognizable large company names, success is still to be determined, wrote ABI in its report "RFID: Emerging Applications Driving R&D Investment and End-User Demand."

Texas Instruments, Symbol Technologies, NCR, Philips, Sun Microsystems are only a few of the big-name companies that have entered the world of RFID. Some recognizable names have entered the RFID fray as systems integrators, namely IBM, Accenture, BearingPoint, Unisys, RedPrairie and Manhattan Associates.

Process questions abound, such as where to store the data, what data should be stored, how to secure and maintain data, and what is the optimal method to integrate data with existing business solutions. Some integrators, such as SAP, are developing enterprise-level RFID patches for customers. Others, in the warehouse management systems space, include Manhattan Associates, RedPrairie and Provia. Long-time DoD integration partners such as Unisys, Lockheed Martin and Accenture are stepping up government-based RFID efforts.

"Due to the time constraints and the still-developing standards, prior relationships will drive RFID integration contracts even more than with previous rollouts, such as [enterprise resource planning (ERP)] or supply chain management systems," noted Erik Michielsen, ABI senior analyst. "This is not necessarily good for the RFID business, as the process discourages competition and rewards relationships over capabilities. The upside is that established relationships will better enable scalable, successful solutions due to better understanding of environment, staff and business goals."

Another complex issue is that RFID is new and there have been few full-scale projects to date, especially for supply chain solutions. While integrators such as SCS, Unisys and Lockheed Martin have extensive, long-term relations with the DoD, they do not have extensive experience with passive, UHF RFID tags. The leading supplier lists for Wal-Mart and the DoD are long, and integration solutions must conform more than differentiate if these projects are going to roll out to specification and on time.

ABI's report follows the technology for applications including asset management, supply chain management and point-of-sale. The study breaks down RFID standards, applications and vertical markets, and it provides marketplace forecasts through 2008. In addition, selected RFID vendors, integrators, developers and IC manufacturers are analyzed, along with their various technologies and product offerings.

Latest